CPWM Budget and Finance 2

Question 1

Which budgeting approach requires managers to justify every expenditure from scratch rather than basing allocations on prior-year spending?

Accepted Answer

Zero-based budgeting

Answer

Incremental budgeting

Answer

Capital budgeting

Answer

Performance budgeting

Question 2

A public works department receives a $500,000 grant that must be spent on road resurfacing within 18 months. This is best classified as what type of fund?

Accepted Answer

Special revenue fund

Answer

General fund

Answer

Enterprise fund

Answer

Debt service fund

Question 3

What is the primary purpose of a fund balance reserve policy in public works finance?

Accepted Answer

To ensure adequate liquidity for emergencies and budget shortfalls

Answer

To increase annual operating expenditures

Answer

To allow unrestricted capital purchases

Answer

To reduce the department's tax levy requirement

Question 4

Which type of cost does NOT change with the volume of services provided by a public works department?

Accepted Answer

Fixed cost

Answer

Variable cost

Answer

Direct cost

Answer

Marginal cost

Question 5

A city issues $2 million in general obligation bonds to finance a new public works facility. What pledges repayment of these bonds?

Accepted Answer

The full faith and credit of the government

Answer

Revenue from the facility's operations

Answer

A dedicated sales tax

Answer

Federal grant reimbursements

Question 6

In governmental accounting, what does the modified accrual basis of accounting recognize revenues when they are?

Accepted Answer

Available and measurable

Answer

Earned and measurable

Answer

Collected in cash

Answer

Invoiced to customers

Question 7

Which financial document provides a detailed estimate of revenues and expenditures for a future fiscal year and requires legislative approval?

Accepted Answer

Annual operating budget

Answer

Comprehensive Annual Financial Report (CAFR)

Answer

Capital Improvement Plan (CIP)

Answer

Management Discussion and Analysis (MD&A)